Carol Bartz was summarily removed from her position as CEO of Yahoo! by the company’s board of directors earlier today. The company issued a statement that Tim Morse, Yahoo!’s chief financial officer, has been named interim CEO while the company searches for a permanent replacement. He will continue serving as chief financial officer.

The decision caught Bartz by surprise, according to sources reported by AllThingsD which broke the story. She still had over a year left on her contract, but terms of her departure have not been disclosed.

“On behalf of the entire board, I want to thank Carol for her service to Yahoo! during a critical time of transition in the company’s history, and against a very challenging macro-economic backdrop,” said Roy Bostock, chairman of the Yahoo! board.

Bartz sent a terse email to all Yahoo! employees. “I am very sad to tell you that I’ve just been fired over the phone by Yahoo’s Chairman of the Board. It has been my pleasure to work with all of you and I wish you only the best going forward,” it read, according to AllThingsD.

Yahoo!’s board also announced the establishment of a new Executive Leadership Council to support Morse and to engage in a comprehensive strategic review. In addition to the interim CEO/chief financial officer, the council members are: Michael Callahan, executive vice president, general counsel and secretary; Blake Irving, executive vice president and chief product officer; Ross Levinsohn, executive vice president, Americas; Rich Riley, senior vice president and managing director, EMEA Region; and Rose Tsou, senior vice president, APAC Region. David Filo and Jerry Yang, who co-founded the company, will each continue in their official role as Chief Yahoo and will provide counsel to the Executive Leadership Council.

“The board sees enormous growth opportunities on which Yahoo! can capitalize, and our primary objective is to leverage the company’s leadership and current business assets and platforms to execute against these opportunities,” Bostock said. “We have talented teams and tremendous resources behind them and intend to return the company to a path of robust growth and industry-leading innovation.”

Yahoo! serves 177.6 million unique viewers according to comScore Media Metrix, a huge number that makes it second only to Google, with its news, sports, business and entertainment sites frequently the most popular in their respective categories. However, Yahoo! has had difficulty converting these numbers to advertising dollars, especially in the face of fierce competition from Google and Facebook.

Related Links:

Wall Street Journal –

AllThingsD –

Photo of Carol Bartz courtesy of Yahoo!’s Yodel Anecdotal on flickr, used under Creative Commons license